According to Marico Industries CEO (Nature Care Division) Shreekant Gupte, the price reduction is in line with raw material prices, which have witnessed a downward trend.

The price of Parachute has been reduced to Rs 28 for a 200 ml bottle from Rs 29. According to industry observers, other manufacturers in the branded coconut oils market are likely to follow suit.

The second major brand after Parachute is Nihar from Hindustan Lever (HLL). Nihar is also priced at the same level as Parachute, ie. Rs 29 for 200 ml. While Parachute leads the market with a share of about 53 per cent, Nihar has garnered a share of about 14 per cent. Other brands such as Coco Care (also an HLL brand) has a market share of eight per cent, as per industry estimates. The last price reduction undertaken by Marico was a year back when raw material prices had taken a dip. The cyclical nature of the industry propels manufacturers to take price revisions in line with the raw material prices. The growth of the industry is currently ruling at nine per cent per annum.

Since the size of the loose oils category in the market is huge (at about Rs 700 crore in value), the scope for conversion from loose oil to branded among large users is high. According to analysts, though the cause and effect in the industry are separated and not directly related, there may still be a marginal surge in demand following a price reduction.

Coconut oils is typically a commodities business where raw material costs, unlike other businesses, accounts for a huge 85 per cent. In such a market, point out industry analysts, good marketing expertise to promote brands needs to be accompanied by experience in raw material purchases.